Europe's Emerging Tier 2 Data Centre Markets in 2024

As the digital realm continues to expand, data centres are becoming critical infrastructure for businesses worldwide. In response to this, Europe’s Tier 2 data centre markets are witnessing a surge in development and investment, particularly in cities like Madrid, Berlin, Milan, Warsaw, and Zurich. JSA Media Consultant João Marques Lima offers a closer look.

Data centres are facilities that house computer systems and associated components such as storage systems and telecommunications. They are critical for the storage, processing, and distribution of large amounts of data. With the rise of cloud computing and big data, along with increased regulatory scrutiny of data security, the design and location of data centres has become increasingly important.

The Tier 2 data centre markets, located outside the main European hubs of London, Amsterdam, Frankfurt, offer several advantages. These include lower land and construction costs, greater availability of power, and closer proximity to certain user populations. They are becoming increasingly attractive for investors and operators alike.

According to recent trends, the Tier 2 markets are on a rapid ascend, with investments pouring into cities like Madrid, Berlin, Milan, Warsaw, and Zurich. These cities are now emerging as key digital infrastructure development areas, catering to different use cases and industries.

Of those, one of the main examples is Artificial Intelligence (AI) which has emerged as not only a huge driver for new locations but also as a game-changing technology in the data centre industry itself. AI can help data centres operate more efficiently, reduce downtime, and improve both the speed and quality of service. AI algorithms can analyse data from multiple sources to predict potential failures, optimise cooling systems, and manage workloads. This has a significant impact on operational efficiency and cost-effectiveness.

Beyond AI, the need for data sovereignty, and the desire for lower latency, allied to the advent of technologies such as 5G and IoT are also driving the demand for data centres in these regions.

Sustainability has become a major focus in data centre development. This is driven both by regulatory requirements and a genuine desire to minimise the environmental impact of these energy-intensive facilities which has consequently aided in the emergence of new markets. Data centres in Europe are leading the way in the use of renewable energy and innovative cooling technologies.

The Revival and Emergence of New Markets

Of the several geographies on the rise, the Nordic region has long been recognised as a favourable location for data centre operations due to its cool climate, abundance of renewable energy sources, and strong digital infrastructure. Recently, the region is experiencing a revival as a data centre hub, with several large-scale projects being announced.

While the Nordics are experiencing a revival, new markets are also emerging in central Europe, the Balkans, Baltics, and Iberia. These regions offer unique advantages such as strategic geographical locations, favourable climate conditions, and government incentives for data centre development. In the Iberian case, and especially when eyeing Portugal, the development of submarine fibre cables is speeding up data centre construction.

All in all, the future of data centres in Europe looks promising. With the rapid digitisation of businesses, the demand for data centres is expected to continue growing. Furthermore, the emergence of technologies such as 5G and AI will create new opportunities and challenges for the industry.

With that said, the landscape of data centre markets in Europe is changing rapidly. The growth of Tier 2 markets, driven by the advent of AI and other technologies, is creating exciting opportunities for investors and operators. 

At the same time, the industry is facing new challenges, from the need for sustainability to the complexities of data sovereignty. Understanding these trends and dynamics will be crucial for anyone involved in the European data centre industry in the coming years.

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